Written by

Dan D'Ambrosio

With milk prices dropping because of increased production nationwide — particularly west of the Mississippi — Vermont dairy farmers once again are worried about staying in business, just three years after declining milk prices and increasing costs in 2009 threatened the survival of many Vermont farms.

“Everybody was hit in 2009; dairy farmers in the Northeast especially were hit very hard,” Mark Magnan said on his farm outside of Fairfield earlier this week. “Fuel went up; fertilizer costs went up.”

Magnan said this year is beginning to look a lot like 2009.

Soon, he and his three brothers, who run four farms among them, will begin planting 700 acres of corn for feed. The fertilizer alone will cost more than $600 per ton, Magnan said, and they will need more than 100 tons.

Testifying Wednesday before the Senate Committee on Agriculture in Montpelier, Magnan told the committee the cost of feed had gone from $220 per ton to $310 per ton in the past year. Other costs also were up, while the price paid per hundred pounds of liquid milk, at just under $17, is below his cost of production.

“Ten years ago that price would have been great,” Magnan said.

The agriculture committee, chaired by Sen. Sara Kittell, D-Franklin, held the hearing to try to figure out how the Legislature can help the state’s dairy farmers, especially in light of federal legislation, called the Dairy Security Act, now under consideration. The act would replace federal milk price supports, due to drop dramatically this September, with an insurance program that would guarantee dairy farmers a return on their investment. Farmers would have to pay for the voluntary insurance.

“We’re in a cyclic downturn again. What can we do to strengthen our dairy industry?” Kittell said to open Wednesday’s hearing. “We value our dairy farms. They are the most important thing in Vermont agriculture.”

Leon Graves, vice president of Dairy Marketing Services, LLC, which markets milk for cooperatives and individual farmers throughout the Northeast, told the committee the “most significant thing” it could do to help farmers would be to help pass the Dairy Security Act.

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The act was introduced in 2011 by Rep. Collin Peterson, D-Minn., and Rep. Mike Simpson, R-Idaho. The Vermont delegation backs the measure and was involved in its creation, said David Carle, spokesman for Sen. Patrick Leahy, D-Vt. Leahy is the senior member of the Senate Agriculture Committee.

“The Vermont delegation has been working closely for a couple of years with Vermont dairy producers on this, and supports including the Dairy Security Act in this year’s farm bill,” Carle said Wednesday.

Carle said the federal farm bill is up for renewal every five years, including this year. He said the milk price supports, known as the Milk Income Loss Contract Program, essentially end in September, before a new farm bill will take effect. The Vermont delegation has introduced a bill to bridge the gap between the end of those price supports and the enactment of a new farm bill later this year.

“The current (milk price support) program expires slightly ahead of the farm bill, therefore, the Vermont delegation has introduced short term legislation to span the period between late summer and this fall when a new farm bill is supposed to be in place,” Carle said.

Price supports or insurance

In an interview with the Burlington Free Press, Magnan said the federal milk price supports never did his operation much good, because they allow for only 2.9 million pounds of milk production annually.

“We’ll make close to 20 million pounds this year,” Magnan said, standing outside one of his barns stretching nearly the length of a football field, at 260 feet long. “The (milk price support) program doesn’t take that into account.”

Magnan and his brothers milk 625 cows on the four farms they operate. The home farm, bought by his grandparents in 1924, is in an idyllic valley outside Fairfield. Magnan said his 85-year-old father only recently stopped working 16-hour days alongside him and his brothers. His mother is 82.

“They never traveled much, never took any vacations, really didn’t play golf or anything like that,” Magnan said. “What they did for retirement was fix up the house.”

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Magnan said the insurance program being considered for this year’s farm bill would work better for him than the milk price supports did because it will allow him to cover all of his production, not just the fraction that current price supports cover.

“We as dairymen can buy insurance,” Magnan said. “Say we think the price of milk is going down in 2012. We can buy a level of insurance we think we need to cash flow.”

Magnan said the insurance program has its pitfalls.

“You have to buy insurance even if the price of milk doesn’t go down,” he said. “But it’s like any other insurance. You buy fire insurance for your house. That doesn’t mean you want it to burn down.”

Perhaps the most difficult aspect of the insurance program, Magnan said, is that you have to sign up for it every five years.

“Can you tell me what the next five years is going to be like, what fuel prices will do?” he said. “You got to know two things: What your costs are going to be, and what the price of milk is going to do. Because our commodities — corn, canola, grain — are traded on the Chicago Board of Trade, we have nothing to do with setting those prices.”

'A ghost town'

Looking over his herd feeding on a mixture of corn silage and chopped grass in the comfortable cool of a well-ventilated barn on a rainy afternoon, Magnan said he knows his cows on sight, with or without their numbered ear tags.

“That’s 3044 right there,” he said. “I know every one of these cows. You can take their tags off. I know how many days she’s in milk, when’s the last time she had a calf. Things like that I can remember.”

Testifying before the Agriculture Committee, Secretary of Agriculture Chuck Ross said the last time his agency counted there were fewer than 1,000 farms left in Vermont: 973. Ross said the agency would count again soon, and he expects to see even fewer farms.

If Vermont’s dairy industry continues to shrink, Magnan said, Fairfield and other towns like it also will be in trouble. In 2009, he said, he and his brothers borrowed money to survive, not only for themselves but also for the community.

“Tell me this: What would this farming community do in Fairfield if we didn’t do that?” Magnan said. “There’s hardly any other business in town in Fairfield, so what would Fairfield be? It would be a ghost town.”